FEEDGRAIN markets in eastern Australia have traded mostly sideways in thin volume as the rain-affected supply chain throws its resources at getting grain to port to meet nearby shipping requirements.

Rain in the past week over much of the New South Wales grainbelt has slowed or stopped harvest in most districts, and with more forecast for the coming week, the already late harvest is getting later.

This has left domestic flour millers and feedmills with some shorts to cover and, along with exporters with the same problem, they are bidding up the market until wheat in volume and better quality can be outloaded.

	Nearby	Deferred
Barley Downs	$288 up $2	$288 steady Jan
SFW wheat Downs	$310 down $5	Steady $320 Jan
Sorghum Downs	$340 up $10	$312 up $2 Mar
Barley Melbourne	$320 up $10	$320 up $20 Jan
ASW wheat Melbourne	$408 up $8	$375 down $10 Jan

Table 1: Indicative delivered prices in Australian dollars per tonne.

Rain troubles NSW

Barley and stockfeed (SFW) wheat are filling the bulk of the feed market’s demand into January, and consumers are continuing to source enough grain from on-farm storages to tide them over.

“There aren’t huge volumes trading on feed wheat because the market expects the price to get lower,” one trader said.

A source in the feedlot sector said testweights for SFW in the NSW-Queensland border region were mostly coming in at 73-74 kilograms per hectolitre, safely above the 70kg/hl minimum.

However, further rain on wheat still in the paddock is likely to see subsequent loads fall below 70kg/hl and into Feed.

“We’re just sitting back and seeing what’s happening.”

Logistics headaches

Rain has cut some roads on the Darling Downs and in the Goondiwindi region in Queensland, and in the Narrabri and Boggabri districts of northern NSW, but alternative routes remain accessible.

Flooding in and around the central NSW town of Forbes has also cut roads, and disrupted one of the main rail routes into Port Kembla, where vessels are arriving to collect new-crop wheat and canola.

The line has been closed at Forbes by flooding since November 14, but is due to reopen today.

“Feedgrains are flat, but milling grades are just exploding, and exporters are scrambling for what is there,” Grain Focus director Michael Jones said.

“On feed, there are a few shorts starting to show up; it’s the end of November and we haven’t seen much wheat or barley.”

Receivals in NSW at GrainCorp, the state’s biggest bulk handler by far, tell the story.

In the week to November 22 this year, 2.32 million tonnes (Mt) of grain had been received in NSW, which compares with last year’s harvest when 5.44Mt had been delivered by November 23.

Again, rainfall in NSW in the past week have been patchy, with mostly 10-20 millimetres in the southern half of NSW, and heavier registrations in some parts of the north, including 22mm at Condobolin, 37mm at Coonamble, 57mm at Moree, and 75mm at Walgett.

While still green or greenish cereal crops on the slopes of central and southern NSW could well escape downgrading, many ripe ones are failing falling numbers tests and going into SFW, GP or Feed grades if the growers choose to deliver.

Mr Jones said growers were in no rush to sell wheat if they had canola to price.

“Canola gets the attention; that’s where the money is.”

APW or better wheat is also going up in value thanks to competition from flour millers and exporters, with the GrainCorp Cunningar site as the closest to Port Kembla now posting bids above $400/t.

Mr Jones said sellers wanted to see the wheat-quality picture develop before pricing.

“Until we know what we’ve got, there’s no rush to sell with the market being flat or going higher.”

Another trader agreed that growers were sitting on their hands.

“Every day, the market goes up and growers have learnt that best thing to do is to not do anything.”

The ASX January milling wheat contract has risen by close to $100/t since November 1, and prices for off grades have softened only slightly on supply-side pressure.

Sodden forecast fuels concerns

Some NSW consumers are putting up their hands for General Purpose (GP) wheat with a maximum moisture content of 14 per cent, above the 12.5pc industry standard.

With much of NSW forecast to get more than 50mm of rain by Sunday, it shows the consumer is concerned about supply in the near term.

While ready for a big harvest, and with numerous segregations, bulk handlers are juggling the worsening quality situation and logistics issues brought about by rain.

“Every time you segregate you lose storage capacity, and I can assure you there are outturn problems.”

Dartboard Commodities principal Brendan Dart said everyone was on standby because of the uncertainty surrounding grain quality in NSW.

“The market is expecting a lot of downgraded wheat and while this is not ideal for millers, it will create opportunities for the feed market,” Mr Dart said.

“The value of barley hasn’t changed much but the price of wheat has gone up sharply, and largely due to the squeeze on milling wheat.

“Quality spreads have widened significantly.

“The export program is heavily biased towards milling wheat and the nearby supply disruptions will cause a lot of chaos.”

Mr Dart said traders will be reviewing their options around the export program but this is difficult when  the quality profile of the crop is not yet known.

“It’s too early to tell on the east coast.”

Cropping areas in South Australia and Victoria are forecast to have much lighter falls than NSW over coming days, and wheat in both states is yet to be harvested in volume.

“I’m very concerned about NSW, and with Vic and SA, we’ll have to wait and see.”

WA has seen some favourable harvest conditions but their quality profile is trending towards lower protein.

“ASW has no minimum protein, so if its protein is higher, someone will pay a better price, but if it’s lower, it will likely end up in feed markets.

“You’ll struggle to get a true indication of fair value for grain until you can see a much bigger part of the crop.

Showers and cool weather are delaying the start of the Victorian wheat harvest, and this has created some shorts in the Victorian.

It can normally source grain straight off the header at this time of year from south-west NSW, but it is also getting rain.

This is hampering outturn of carryover stocks from north of the border, as well as stopping or delaying harvest.

Cottonseed traction

Nearby cottonseed was nominally $5/t firmer this week but only small volume hand-to-mouth trade was taking place.

New crop 2022 cottonseed gained some traction during the week, gaining at least $5/t.

“Some container demand underpinned new crop values,” Woodside Commodities manager Hamish Steele-Park said.

“Cool, wet conditions not ideal for cotton crop yield potential, along with excessive rainfall saw reports of growers pumping excess water off crops, particularly in the Namoi Valley region.”

“New crop cottonseed values were $345/t delivered Darling Downs approximately May to August 2022.”